CPA STUDY QUESTIONS AND ANSWER’S PART 2| Latest 2024/2025 Update | 100% Correct | GRADED A | Verified Elaborations | Download to Score An A

CPA STUDY QUESTIONS AND ANSWER’S PART 2| Latest 2024/2025 Update | 100% Correct | GRADED A | Verified Elaborations | Download to Score An A What constitutes the basis in the stock received? (ANSWER) Services = Fair Market Value Property = Adjusted Basis Money = Contributed Amount PLUS, any acknowledged gain To what does the 10% charitable contribution limit apply for corporations? (ANSWER) Taxable income BEFORE NOL, capital loss carryback, charitable contributions, DPAD, DRD Some nondeductible business or trade expenses include: (ANSWER) -Allowance method for bad debt -Illegal activities -Business gifts over $25 per person per year -Business meals over 50% -Political contributions -Club dues -Executive compensation exceeding $1 million annually (CEO and the next four highest-paid officers) -Federal Income Tax Dividends Received Deduction (DRD): (ANSWER) Less than 20% - 70% deduction Less than 80% - 80% deduction More than 80% - 100% deduction What prerequisites must be met to file a consolidated return? (ANSWER) -Both companies must consent -Must possess over 80% of the company (both voting and all stock) What are the benefits of filing a joint return? (ANSWER) -Share capital/operating gains/losses -One return -Full DRD -Eliminate tax burden on intercompany transactions Explain Alternative Minimum Tax (AMT): (ANSWER) Regular Taxable Income +/-Adjustments +Preferences +ACE Adjustments ---------------------------------- AMTI Exemption (40k - (25% of AMTI - 150k)) ---------------------------------- AMT Base * .2 ---------------------------------- AMT -Foreign Tax Credits ---------------------------------- Tentative Minimum Tax AMT Adjustments (corporate): (ANSWER) Long-term contracts Installment sales Depreciation issues